(BPT)- Home sales seem to be finally warming up after a five-year chill, as demand gradually builds among first-time homebuyers and existing homeowners seeking more room. Historically low mortgage rates, rising rents and relatively positive economic indicators are enhancing consumer confidence and driving the trend, according to the National Association of Realtors (NAR). As demand grows, home prices for a median existing home are expected to rise as much as 5 percent nationwide in 2013, according to the NAR. This should encourage existing homeowners who’ve been patiently sitting on the sidelines to consider putting their homes on the market.
Despite this “warming trends” in the market, Attorney Angela Philbrook, owner of Cape Cod Title & Escrow, P.C. in Barnstable, says there are a lot more hoops to jump through now than a few years ago. “The mortgage application process is certainly more extensive as far as the documentation required by lenders. Essentially lenders need the borrower to be able to document every statement made on the borrower’s loan application – for example – up to 6 months of bank statements, 2 years of tax returns, W-2’s, or letters from a CPA if you are self-employed. The key to taking advantage of these reasonable housing prices and fantastic mortgage rates is to be organized and prepared going into a real estate transaction.”
Lenders are paying close attention to buyers’ ability to repay a loan. The generally accepted principle is that no more than 30 percent of a household’s take-home income should go toward the principal, interest, taxes and insurance.
If you are planning on buying a home within the next six to nine months here are some tips to keep in mind:
• Start planning now. Even if you’re a year or more away from buying a home, start preparing now. Build up your cash for a down payment and check your credit report for accuracy. Pay all your bills on time and zero out all credit card debt.
• Get a pre-approval letter. Home sellers want to know that you can get a loan to buy their home.
• Get a lawyer. To achieve the outcome you want, it makes sense to have a trusted advisor and advocate at your side. An attorney is best positioned for this role and can help you face challenging circumstances that come up in the process of buying or selling property.
• Learn about the neighborhood. When you buy a home, you’re also buying into a community. Start your home search by first targeting a neighborhood where you want to live. Avoid neighborhoods where homes are not being kept up. Check out the schools, too. Great schools attract families, and keep up home values.
• Keep your emotions in check. If you’ve found a home you like, don’t fall in love with it yet. Make sure your offer is contingent upon a satisfactory home inspection conducted by an inspector that you hire (not the seller).
• Save some extra money. Whether you’re buying your first home or your third, moving and getting a household established can cost more than you anticipated. Make sure you save enough extra money to redecorate your new home to fit your lifestyle, and to pay for unexpected repairs.